We Are All “Outsourcers”

Though it is barely out of its lexicographic swaddling clothes, the term “outsourcing” is among the most loathed words in the world. Defending it ranks almost as high as attacking baseball and apple pie on the list of sociological wrongs.

But many of those who despise the notion of “sending work overseas” might be surprised to discover that they, too, are “outsourcers”.

We all are.

One of the key aspects of our first discussion among students involved with the E3NE Ethics and Economics Challenge, was our focus on the division of labor.

Archeology shows us that even ancient Homo Sapiens divided their labor. Some people were good at hunting, others were older or weak. Some were good at cleaning the hunt. Others were good at raising offspring, or making clothes. Those who were efficient at certain tasks but bad at others focused on their strengths, and the division of their labor allowed them to produce more of their product or service than they might have been able to produce had they been forced to concentrate on myriad tasks. The surplus allowed for trade, and trade allowed for competition, which, in turn, lead to even more efficiency in the productive system.

Just like ancient humans, contemporary people divide their labor, concentrating on what they do best, or enjoy doing most, and by doing so, they compete with others, and lift productivity higher and higher.

But it is that focus on and exclusion of tasks at the heart of the division of labor which help us understand why “outsourcing” is not only ethical, it is natural, beneficial, and essential to human progress.

The Division of Labor IS Outsourcing…

Every person involved in the division of labor outsources. If we did not outsource, we would not have enough time in our days to make the things we want or perform the services we desire performed. If I were to try to fix my car engine, it would take me months or years just to learn the rudiments of the process. If I were to try to grow all the food I want to eat, even while I had to get the wood fuel I needed to heat my home, it might take so much of my time to do the former that I would not have enough time to do the latter.

Instead, I concentrate on using the skills I use best — which I can offer to customers for a price that is more attractive than the offerings of others — and we trade, freely, without coercion.

In other words, I outsource my work to others, and they outsource part of theirs to me, almost all day, every day. The more people with whom I trade, the more “outsourcing” I can do, and the better my chances of getting better and better deals that save me toil.

Just like we outsource from person to person, we also outsource from people in one region to people in another, or from people of one age or skill set to people of others. People who head up their own companies and manage the business affairs outsource their secretarial skills or marketing time or janitorial work to others who might not have acquired the higher level skills of management. People who live in Alaska outsource the growth and harvesting of strawberries to people in southern California rather than trying to grow them in energy-hungry hothouses in Anchorage.

Is this bad?

Again, consider these actions as little more than larger-scale “division of labor” – ways to maximize time and effort rather than wasting them on less efficient and more difficult tasks.

The Bigger Picture…

This all seems very reasonable. But some people are wary of carrying the logic across international borders. They don’t see international trade as mutually/universally beneficial, but as a tug o’ war, where the use of foreign labor is not only a loss, it is immoral and destructive.

“Sending jobs overseas” is immoral, they might say. It decreases the demand for native/local labor.

But if that is the case, should we stop hiring others to fix our cars or to farm our food because it decreases our demand for our own personal labor?

We would only choose the foreign labor if it were a better deal than native, local, or personal labor. We would not rehire a plumber if he caused damage to our home, or if we could get a better deal with someone else, and, likewise, we would only continue buying foreign labor if it makes our lives easier, if it saves us cash. This saving of cash allows us to spend the saved money on other things, which employs more people – including native/local workers – and helps new businesses start and grow.

Likewise, the importation of foreign-made products is seen as malicious, or, at best, short-sighted. Yet, just as the Alaskans import strawberries and save time, money and energy, importing from one nation to another, or from one person to another is beneficial, and, as we noted before, essential to human betterment. It saves us money, money that can and will be spent on new products, or invested in new business ventures or research and development – all of which create new jobs in budding fields that would not have existed if we did not find the best bangs for our bucks.

The importation of labor is also seen as wicked. Yet, as with all the other instances of “importation”, or “outportation/outsourcing”, creating a larger labor pool does many good things. First, it decreases labor costs, which allows business to make things for less and allows consumers to get things for less. As with our division of labor, why should we have people do certain tasks if others can do them for less? Humans invented tools and machines to decrease their workload. Why make work harder, more expensive, or more time-consuming, and why make people work more to buy the things they want or need?

What is most fascinating about the umbrage and offense leveled at the concept of “outsourcing” is the set of lessons such disparaging remarks overlook. In fact, the missed opportunities for learning are not limited to those mentioned above. Lessons about immigration and even the so-called “trade deficit” can also be derived from studying the myths involving “outsourcing”, and we will discuss those in our next post.

Good points from a fresh perspective. I must admit, I am guilty of vehemently denouncing “outsourced” manufacturing. “In the interest of the shareholders ” allows corporations justification to move factories; devastating families, towns, communities, and ultimately our national economy. Your point speaks of a larger picture, fueled by economic freedom and reinvestment from said profits, and may in fact have merit. However, in most cases the result of the global manufacturing shift is significant loss of (domestic) jobs, immediately. This impact is severe and can not be understated in my opinion.